Monthly Archives: March 2024

Have you ever heard this horror story? A founder locked in bitter arguments with investors, the dream turning into a nightmare. The investor did everything they could to get out because they didn’t see eye to eye with the founder. But no one wanted to invest in your company. Why? Because the current investor didn’t give other investors the right impression of the founder. The company takes a nosedive and BAM!! Crash. All because an investor didn’t like something said, a strategy the founder presented, a potential partnership the founder was looking at, and the list goes on and on. Please don’t get me wrong, disagreements happen. Sometimes they are healthy but most of the time they are not. The question here is what if you could avoid the negative drama entirely?  The key is – Asking the right questions to an investor well before you get tangled in legalese and term sheets. Why put a ring on it and sign a deal if you haven’t interviewed your investor yet. There is nothing wrong with interviewing an investor. Not all investors are created equal and you need to make sure your potential new investor partner is perfect for you. Money isn’t everything and you don’t want to make of getting money from an investor that is a nightmare for your business.

I would like to tell you of a technique I have used and recommended to others for years which works. Think of it as rapid dating questions and investor revelation tactics for founders to use on investors.  I developed a method I call I.N.V.E.S.T, which you can interview potential investors and ensure a match made in startup heaven.  Here’s how to unlock the power of INVEST:

I stands for Interest or Industry Expertise: Imagine your investor as a seasoned guru, guiding you through the treacherous peaks of your market. That’s why industry knowledge is crucial.  Quiz them on your industry, its challenges, and its opportunities.  Feeling confident in their understanding is like having a reliable guide by your side. How knowledgeable are they about your industry? Talk to them about recent news say 3-4 weeks old in your sector and see if they know anything about it. Similar to dating someone you want to make sure you have the same interests. If you don’t then it’s not the right fit. If they are not Intune with your industry how can they be of significant support and value when it comes to business related matters? Make sure you are comfortable with your investors’ interest levels.

N is for NetworkPowerhouse:  Connections are currency in the startup world.  A well-respected investor can open doors to dream partnerships and customers.  Ask them about their network – who are the power players they can connect you with?  How have they leveraged their network for past investments? This will be very helpful in understanding how well connected they are and if they can truly help you grow rapidly with the aid of solid connections. An investor should be able to open doors you need to open so make sure you ask about their network and get some names and see if you feel those contacts would be of great use to your business.

V is for Values & Vision Alignment: A company’s core values and vision are its guiding stars.  Mismatched stars with an investor’s beliefs can lead to constant arguments and misalignment.  Talk openly about your values and future goals.  Does your investor see the same alignment?  This is your chance to assess their fit and potential to be a valuable compass on your journey.

E is for Engaged:You don’t want a silent investor, a ghost in the machine. You want a teammate, someone who actively participates in your success.  Ask about their communication style – how often do they connect with founders?  What’s the size of their portfolio in your industry?  How engaging do they expect you to be with them? These questions reveal how much priority they’ll give you.

S is for Strategy Synergy: Don’t keep your long-term plan under lock and key!  Share your strategy beyond the initial phases.  Get your investor’s input – their experience could be a treasure trove of insights or you reveal they are not the right investor for you.  This two-way conversation fosters collaboration and ensures your strategies are in sync for the long haul.

T is for Trustworthy:This is the bedrock of any successful partnership.  Research your potential investor, check references, and ask for referrals.  Test the waters!  Request time-sensitive information and see if they deliver on their promises.   A trustworthy investor is someone you can build a solid foundation with, someone who walks the walk, not just talks the talk. Someone you can trust to help you when you need help and give you the priority you need.

Remember, investors come in all flavors.  By using the INVEST method, you’ll weed out the wrong ones and find the perfect partner to propel your startup to success!   A happy marriage (founder-investor style) starts with the right questions. So, don’t rush to the altar just to get into a bad divorce – interview your potential investors thoroughly and find your perfect match!

Stay blessed,

Chris Folayan

Award-Winning Author / Serial Entrepreneur / Founder